tv Nightly Business Report PBS May 8, 2012 6:30pm-7:00pm PDT
>> this is n.b.r. >> tom: good evening. i'm tom hudson. susie is off tonight. worries about greece catch up to wall street. what turmoil there means for your portfolio. in illinois, caterpillar workers take to the picket line. what's at stake for them and the company? and, why internships aren't what they used to be, as we continue our look at the summer job market. that and more tonight on "nightly business report." it was all about europe today in u.s. financial markets. the dow tumbled 76 points, although it was down almost 200 earlier in the day. the nasdaq lost 11, the s&p fell nearly six. as suzanne pratt reports, the selling may be more than one-day indigestion. >> reporter: wall street's big
reaction to europe's elections came a day later than expected. perhaps it's the time change, or more likely worries heating up about greece. in particular, u.s. investors wondered today exactly who's in charge in greece. europe's instability is a serious threat to america's fragile economy and corporate profits. some market pros say today's sell-off could be the start of a small correction. >> i don't think there's a tremendous risk in the market. we actually know all the potential negatives. we know what can go wrong. but i think the quicker it happens, the less far it has to fall. >> reporter: the upside of europe's troubles for investors is a renewed flight to quality, straight into u.s. bonds. it continued today as treasury prices rose, pushing yields to three-month lows. the appetite for u.s. government debt is nothing new, but there are doubts about how long the rally will last.
>> it's hard to see how exactly the bid ends. we do suspect at some point in the not to distant future that people will kind of have a buyers' strike against treasuries just because yields will be too low for them to buy. >> reporter: many investment pros says it's unlikely the buyers' strike will extend to stocks, but we could see a pickup in volatility with europe back in the headlines. suzanne pratt, "nightly business report," new york. >> reporter: still ahead, i'm erika miller at qvc headquarters in pennsylvania. i'll take you behind the scenes and show you how the network knows what you want to buy. "nightly business report" is brought to you by: captioning sponsored by wpbt
>> tom: what is important for u.s. investors and companies. nicole is with nick colas from convergeex. nick, is greece anymore of a risk tonight for u.s. investors a week ago or say a year ago? >> it is not that much more of a risk in terms of what it will do to stock prices here. with a risk lies is not in greece but the next country to fall which is likely spain. we have bigger fish to fry than greece. unfortunately they are heading towards us. >> wolfgang to that point we saw the spanish government bail out or move as elgts from a troubled spanish bank. is spain a bigger fish to fry. can the global economy and european government handle it? >> yes. it's a bigger fish. that's why they're kicking the
can down the street on greece. they can afford greece and maybe portugal. but not spain and maybe a fall in italy. they're trying to gain confidence in the euro and bail that out. now it's trickling down. people will focus on spain, as we talked about nine months ago. these are the big ones the european's can not afford. >> wolfgang, you were on record here months ago at nbr predicted a breakup of the euro. we have seen a u.s. dollar gain. what does this mean for american investors? >> american investors have to look at corporations of individual investments. see if those companies are set up to understand and manage their risk. if you bottom line it, it means the dollar will go up. the international revenues they have will be less at the top line. the good news is there are corporation that's manage it well. we talked about an adventure,
google and these companies that understand their exposure from raw data to decision. other companies like philip morris don't have that understand kroll yet. investors need to understand who is currency agnostic and who is not. >> tom: how about that, nick? if the dollar strength evens the weakness of overseas sales. >> yes, wolfgang has it right. there are a range of companies and a range of risks to focus on. at one end the auto companies will face a tough time in europe. demand is slowing down. i would point out one positive though. we talked about the negatives. a stronger dollar should create lower oil prices making for a better summer driving season and stronger vacation season in the u.s. >> tom: we have seen that
lately, guys. oil prices dropping below $98 a barrel today for instance. where ells can we see the positive nature in the currency markets to stabilize if not rise? >> i think people are looking at procure. >> if they're looking at procurement they have to look at top line revenues that's not good. look at the top line outsources and procurement. the stronger dollar will help bye a prod? >> tom: nick, does this help out for global investors. >> yes the euro will be weak. the dollar has faltered lately. we have been concerned about that. at the same time it's the last chance for a global economy to grow in 2012. lower oil prices would help and
a reversal in trends of employment would be helping. we're the last chance for the world to have positive tkw-rbgs op here. >> tom: our guests talking about europe and the global economy. nick colas and wolfgang koester. >> tom: the disappointing job growth this year comes as some companies are ringing up healthy profits. this disconnect between profits and hiring is one reason workers are striking a caterpillar plant near chicago. as diane eastabrook reports, what is happening at cat could be an early warning sign for other companies. ( car honks ) >> reporter: drivers honking their support helped these striking caterpillar workers
weather picket lines in a downpour. nearly 800 workers who make hydraulic systems at this plant near chicago walked off the job last week when the international association of machinists and aerospace workers couldn't agree on a new contract with cat. the union's beef: a proposed wage freeze, higher health care premiums and switching from a pension to a 401(k). >> my purpose for coming here was for a pension, to be able to go out with a pension. now i have 19 years here, and they want to take that away from me. >> reporter: cat is hardly hurting for money. it reported a $1.6 billion profit in the last quarter, up nearly 30% from the previous year. it also revised its 2012 outlook from $9.25 a share to $9.50. caterpillar has historically had a contentious relationship with its labor unions. back in the late 1990s, the united auto workers union went on strike for more than a year before it agreed on a new contract.
since then, work stoppages at caterpillar and other companies throughout the u.s. have declined. the a.f.l.-c.i.o. says off- shoring jobs and replacing striking workers have made labor actions less effective. the recession and high unemployment have also played a roll. but labor professor robert bruno thinks the combination of corporate profitability, anti- wall street sentiment and low job growth could spark more strikes. >> why not then take a shot and try something? it's still risky, but i think the calculus that's made is, if not now, when? and things aren't going to be better. and so keeping the job is kind of a slow economic death, so the strike. >> reporter: that sentiment is motivating some of these workers. >> if we don't stick to our guns, everyone is going to be making scab wages. >> reporter: caterpillar says production at the joliet plant is going on normally with managers filling in for striking workers. so far, no new contract talks are scheduled.
some strikers say they'll just wait it out. >> i really want the job, so i'm willing to stay until whenever, until they find a solution. >> reporter: diane eastabrook, "nightly business report," joliet, illinois. >> tom: the summer internship used to be a right of passage from college life to a full-time job offer, but no longer. a new survey finds 91% of companies expect students to have one or two internships, but half of those companies have not hired any interns over the past six months. we continue our week-long look at the summer job market with dan shwabel, author of "me 2.0" and founder of millennial branding. >> tom: dan, why the difference between expecting students to have internships but then not hiring interns? >> well, because you need to have a internship to get a job now. but a lot of companies would rather just have their current
employees do most of the work. most of the important work without having to give that responsibility to people not depletely tied and accountable to the company. >> job demand is still tight these days. what skills are companies looking for, in your survey? what did companies say they want from employees. >> we found that companies are prioritizing stock skills over hard skills. teamwork, communication skills, and people with a positive attitude. so, because they believe that hard skills are easily learned and soft skills are developed overtime. as you progress in a corporation soft skills are important for leadership rolls. >> tom: one of the soft skills you identified was communication. i found it interesting communication is a top skill required but when you ask them the hardest skill to find communication was number one. why do you think the disconnect exists? >> well, i think it can be hard, easy to find it.
it depends on relationships built with the companies and cod colleges. a lot of communication skills, you don't learn them in school and present until you go to certain business skills. there is a disconnect there. >> tom: dan, that brings up a interesting point. unemployment rate for early 20s is 13%. it'secompetitive. companies want communication skills. are schools preparing graduates? >> a hundred percent of employers surveyed said yes. in a sense they're not. 29% of employers are looking for aunt wren pure ship skills now and a lot of schools don't have those programs. more and more employers are looking for people very accountable for their own careers and are the drivers and not relying on companies to train them and make them
progress in a company. >> tom: you exemplify that entrepreneur ship. thank you, dan for joining us. our guest. >> tom: weakness in european stock markets washed ashore in the u.s. today as investors ignored increasing confidence among american small businesses. the s&p 500 was in the red the entire session, falling to its lowest level of the day before noon eastern. the index pared back the earlier losses to finish down 0.4%.
volume picked up on the selling today. 900 million shares moved on the big board, almost 2.2 billion on the nasdaq. leading the market lower today: the consumer discretionary sector shed more than 1%. other losses were more muted; financial and materials sectors were down about 0.5%. speaking of consumer-focused companies, thanks to more visitors to its theme parks, walt disney earnings were stronger than forecast last quarter. the house of the mouse earned 58 cents per share, three cents better than expected. its movie business lost money thanks to the box office bomb "john carter," but business was up at its theme parks and its media networks, like abc and espn. shares fought against a weak tape all day today, ending the regular session up 1%. this was the best percentage gainer among dow industrial stocks. after the close, the stock continued moving up, gaining another 1% from this closing price. if that holds through tomorrow's opening bell, disney stock would hit a new high.
we have more analysis of disney's stock on our web site, www.nbr.com, under the "blogs" tab. the consumer stock behind the sector's weakness today was watch seller fossil. the stock lost almost 40%, plummeting to a five-month low. volume jumped 16-fold. this is one company where we saw the impact of a recession in europe. for the second straight quarter, sales were disappointing, and fossil warned europe will continue to be a drag on its business for the rest of the year. a couple of mid-cap medical companies experienced the risk of seeing costs increase despite higher sales. one of those was surgical device maker mako. the stock lost more than third of its value, falling almost 37% down to its lowest price since late december. it lost more money than feared as expenses increased. it also lowered its sales guidance for a key product. biotech drug maker dendreon also lost more money than predicted, sending shares down 25%. it predicts single digit sales growth of its key prostate drug provenge. that's its only commercial product and can cost $93,000 per patient.
a huge player in the mexican mobile communications market wants to expand into europe. america movil has made a play for 28% of dutch telecommunications firm kpn. it's a $4.2 billion offer that the dutch target calls "too cheap." america movil has stock traded in the u.s. those shares fell almost 10%. they were at a 52-week high just yesterday. if successful, this would be his company's first big investment in europe. despite concerns returning about europe, we did not see investors flock to the perceived safety of gold. prices settled just above $1,600 an ounce, falling to a five- month low. the u.s. dollar was stronger due to the european concerns, which put some pressure on gold as a rising dollar makes gold more expensive since it is priced in dollars. gold mining stocks took a hit. gold-corp fell 4.5%. barrick gold and newmont mining shed at least 3% each. in our exchange traded fund market flash, all the most
active traded funds fell today, led by the emerging markets fund, down more than 1.5%. and that's tonight's "market focus." >> tom: despite worries about european consumers, one company seeing growth overseas is health products firm henry schein, selling gear to dentists, doctors and veterinarians. first-quarter earnings were better than expected. the company saw a double-digit sales increase at its animal health business, which it is expanding in europe. stanley bergman is the c.e.o. of henry schein.
>> tom: congratulations on a strong quarter. i have to ask you expanding in europe? are you trying to vie when prices are low in the continent? >> i think it continues to grow our footprint globally in the office space praction environment. accidentist, animal, veterinarians throughout the world. there is no time like now to continue to spanned in a healthy market. >> tom: do you see organic growth in europe, not just buying through acquisitions, organ i can tkpwroelgt? >> organic growth for the company this quarter, across the board the whole company was about 6%. we saw a good organic growth in our dental animal health and our physician business here and abroad. >> tom: and abroad. you increased your 2012 earnings forecast.
what gives you the confidence the sales trends you see now will continue through the year. >> obviously there are no a shur apbss. i don't have a crystal ball. we have been public for over 16 years. have consistent growth on the top line in terms of eps really for the entire period. the markets we are in are quite healthy driven by the baby boomers. they understand preventive care dental and animals and increase of companion animal companionship around the world. bat buyy boomers are driving this and they have the buying pow e. >> tom: you mention animal health is the power of growth. are you looking to buy that in the u.s. as well. >> we are already the largest distributor provider of animal health products in this country,
the united states, europe, australian/new zealand. we plan to have good growth and supplementing that with geographic footprint and depth of the marketplace and add new products. >> tom: are you finding evaluations interesting at these levels given what is going on overseas? >> our evaluations have been pretty reasonable the entire period we have been public. most of our acquisitions are transactions we have known for a while. competed with them, worked complementary with them. these deals may take a time. they're not as elastic to the specific macroeconomic conditions at a point in time. >> tom: got you. stanley, we appreciate it. thank you, we are speaking with the ceo of henry schein. >> tom: you may not recognize the name liberty interactive, but you probably have heard of qvc and its tv shopping channel. liberty interactive's first- quarter profits were up 21%.
nearly 90% of its revenues come from qvc, the world's biggest tv shopping network. in tonight's "shop talk," erika miller takes us behind the scenes at qvc's pennsylvania headquarters. >> reporter: this is the qvc everyone sees. this is the qvc almost no one does. the network rarely lets journalists backstage or in its control room, the brains of the operation. >> people are picking up more than one here, pat. starting to pick up here. >> reporter: above the sets, a computer tracks the sale of every item on air, second by second. >> we know exactly how many callers are calling at any given time. we also have another system that lets us know how many of an item are being ordered instantly. >> reporter: once the show is over, two of everything get stored in this vast warehouse called product central. so how many items are here? >> a lot! there are tens of thousands of
items in this center. >> reporter: one interesting trend has emerged since the recession: consumers are buying more expensive merchandise. >> our price points have gone up and continue to go up, not because we're increasing price by any means but because they are self-selecting the better and best end of our inventory. >> reporter: qvc has changed a lot since 1986, when it was founded by joseph segal. it's gone from offering mostly commodity items to big brand names. 35% of sales come from outside the u.s. the network now reaches 200 million households worldwide. as qvc has grown, so have its sets. i feel like i'm in a big house. >> and that's the goal. you should feel like your in a big house. >> reporter: qvc is more than a popular tv network, it's also one of the nation's biggest retailers.
with u.s. revenues of about $5.5 billion, qvc ranks higher than abercrombie and fitch, williams sonoma, and nieman marcus. >> qvc is a funny business. it's television and it's retail. and television is about selling emotion. and if you can connect with the host and like them, it's a far more personalized experience. >> reporter: viewers also like getting exclusive merchandise from celebrity designers like the kardashians, rachel zoe and isaac mizrahi. model camila alves sells handbags. she loves the immediate feedback from viewers customers. >> you have an instant gratification with them. they let you know what they love, what they don't love, what colors they want to see. >> reporter: qvc is also differentiating itself from rival hsn by offering more live programming at exclusive events like fashion week. given that 83% qvc customers are female, we wondered what c.e.o. mike george likes to buy. >> i just bought a new keurig coffee maker, which is probably
the third or fourth i've bought from qvc for friends and family. >> reporter: and you can be sure that as he made that purchase, plenty of eyeballs were watching. erika miller, "nightly business report," westchester, pennsylvania. >> tom: there's no business that celebrates violence quite like professional football. it's a multibillion-dollar-a- year industry built on brute force. but is it an example of putting profits over people? here's rick horrow. >> in business, it's commonly said that people are your most valuable asset. the unfortunate and untimely death of retired football star junior seau has reignited concerns that the n.f.l. needs to do more to protect its people, the players. while it's premature to blame concussions and brain trauma for seau's suicide, that shouldn't detract from the more pressing issue: the obligation a business has to its employees beyond just compensation. whether its stock options, vacation time and 401(k)s in fortune 500 companies, or
unlimited medical care and a seasonal work schedule in professional sports, benefits tend to be a differentiator when prospective employees choose a new job. even in today's weak job market, people with the right skills are in high demand. just consider the talent war in silicon valley between facebook and google for computer engineers. n.f.l. players have the benefit of huge paychecks and collective bargaining rights, things a great majority of workers don't have. but they also run the risk of short careers with life-long injuries. how any organization, from the n.f.l. to a small company, treats its human assets speaks loudly about whether that organization prioritizes profits over people. i'm rick horrow. >> tom: good night, everyone. we'll see you online at www.nbr.com and back here tomorrow night. "nightly business report" is brought to you by: